Embattled Faritec seems to be on the road to recovery, as the company has trimmed its losses in the six months to December.
This is in line with CEO Fanie van Rensburg's previous expectations that the company would be flat for the first half of the year, and should make a profit by the end of the year, which is in June.
Faritec made a net loss of R14.397 million during the period, which is an improvement on the loss a year ago of R21.464 million, and the year-end loss for June last year of R159.5 million.
On a per share basis, earnings per share moved from a loss of 5.3c a year ago to a loss of 0.8c. Headline earnings showed a similar improvement, moving to a loss of 0.7c, from the 5.3c loss a year ago.
The company is moving ahead with a rights offer and aims to also get creditors to convert their debt into shares, which should eventually raise R80 million. This cash will be used to implement a turnaround programme and allow the company enough working capital to expand.
New focus
strategy is focused on the data centre environment, where it has been historically competitive and has the required skills base. During the half year, the company streamlined its operations and closed its HP division, FileNet and Management Print Solutions.
As a result, revenue dropped from R414.1 million to R272.8 million. However, its gross profit margin improved from 22.6% to 26.6%. This was due to the company's focus on the higher margin data centre and a shift in product mix to services.
Faritec has also been paying down debt, and repaid R7 million during the half-year, which trimmed finance costs. The company, which has R55 million in the bank, has been slow in paying back creditors due to much of the free cash flow going into paying down debt.
Its cash flow has been restricted because it continues to incur losses. However, converting creditor debt to equity should aid this situation, it says.
Van Rensburg has said the company has secured agreements to fund R55 million of its capital raising of R60 million. Van Rensburg hopes to reach R80 million.
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